Original URL: http://www.theregister.co.uk/2010/07/26/hds_enigma/
Hitachi Data Systems: A storage giant lost in translation
I just don't know what I'm supposed to be
Hitachi Data Systems (HDS) is the only world-class Japanese storage company, with its USP-V high-end enterprise arrays and AMS mid-range systems.
Its fellow Japanese corporations, Fujitsu and NEC, are under-performers in comparison.
In fact, the USP-V arrays are so good that HP OEMs them and Sun did resell them. Acer OEMs a custom low-end AMS array; Sepaton OEMs the standard AMS arrays. Forty four of the top 50 Fortune Global 500 companies are HDS customers and HDS has a lead over EMC and IBM in enterprise storage. For 13 years Hitachi has been number one in Japan for enterprise and mid-range systems storage.
How has this come about? How can we comprehend the enigma that is Hitachi Data Systems?
Hitachi is a corporate behemoth with some 360,000 employees, 932 subsidiaries, a hundred-year history, and products that range from power stations, trains, hospital systems, and supercomputers through to servers, storage and hard disk drives. In the era when mainframes ruled the glasshouse data centres and Japanese companies were full of self-confidence and ready to take on the world, Hitachi began making IBM plug-compatible mainframes, classic me-too products. HDS came about because of that.
Hitachi established Hitachi Data Systems in 1989 in conjunction with EDS, when it bought National Advanced Systems from National Semiconductor, to sell its mainframe and allied storage products outside Japan. The products required detailed and intricate selling of features to US and European customers. It made sense to recruit local sales, marketing and support people and employ them in a US-based company that was a part-subsidiary of Hitachi. Doing this with EDS gave Hitachi access to a ready-trained mainframe-aware sales force.
The location of HDS in the Hitachi corporate structure goes like this: Hitachi has an Information Systems and Telecommunications Systems Group (HISTS), which incidentally generated the most revenue in the overall Hitachi group with about 17 per cent of total fiscal 2009 revenues.
There are two divisions concerned with storage in the HISTS group. Firstly there is Hitachi Global Storage Technologies (HGST) which makes hard disk drives, and, secondly there is the Hitachi Storage Solutions Group (Hitachi SSG) which carries out research and development, and builds and sells hardware, software and services in Japan. HDS is a subsidiary part of it and sells, markets and supports the storage products in the entire world outside Japan.
Hitachi GST is the result of combing the 2002 acquisition of IBM's disk manufacturing business with Hitachi's own disk manufacturing operation.
Shinjiro Iwata, a Hitachi VP and exec officer in the Information and Telecommunications Systems Company, says: "When the ECL [Emitter-Coupled Logic] technology changed to CMOS [Complementary MetalOxide Semiconductor] IBM could do more than us in the late 90s. We couldn't carry on doing the mainframe business. We tried open system servers in late 90s [but didn't succeed]. What was left was storage. We became a storage-only company in 2000. There was no other place to go … for HDS and the storage division."
"Storage is different from servers. A server has semiconductors from Intel and operating system software from Microsoft, meaning the parts that we control are getting smaller. It's different in storage." There was more scope in storage for HDS to own more of the product and so make more revenue from it.
HDS became a wholly-owned Hitachi subsidiary in December 1998 with the EDS part being bought out by Hitachi.
The cornerstone of Hitachi's rise to enterprise storage success has been the Universal Storage Platform - Virtualised (USP-V). There is only one other product like it: IBM's SAN Volume Controller (SVC). The SVC resides in a storage area network (SAN) fabric, being basically an in-band virtualising storage controller, presenting a single storage pool built from the arrays connected to the SAN. The USP-V is a highly intelligent array controller than virtualises that array's capacity plus that of connected arrays, and presents this as a single storage pool.
It can also virtualise connected third-party arrays, making it easier for customers to adopt as they don't have to get rid of their existing storage. The SVC eventually gained this facility as well.
A core idea was to disaggregate the storage controller so that it could be developed separately from the back-end media enclosures, and scale in its performance and bandwidth separately from the back-end enclosures' capacity, to the point where it could manage and aggregate together several back-end arrays.
Chief scientist Claus Mikkelsen said that Hitachi SSG developed a large cache controller in the late 80s. It adopted a crossbar internal controller communications scheme in the 90s and that enabled the controller to have more intelligence and support more back-end storage. This scalable HiStar switch architecture was featured in its Lightning storage arrays in 2000.
Iwata said: "We announced [USP-V] storage virtualisation in 2004. It was not a unique concept but we made it work; we had a good guy." That guy was not just good, he was brilliant. Without him HDS would be just another Japanese storage also-ran. In fact we could say he is the Hitachi SSG equivalent of Moshe Yanai, the designer of EMC's original Symmetrix, yet no one in the west knows who he is.
The HP USP-V OEM relationship is with Hitachi SSG. The Sun USP-V reseller deal was struck with HDS. Mikkelsen said: "HP became a USP-V OEM in 2004 when the USP-V was already done. HP had no input to the design and, despite what they say, very little input since." HP has been a Hitachi OEM since 1999.
Mikkelson said this about the USP-V's development: "We invested a lot in disk array systems development; very different from Fujitsu and NEC. Disk array systems is a great success story with collaboration between R&D and software and networking." He reckons IBM is the only other company in the IT space with the same breadth of development resource as Hitachi, but it's very silo'd. Hitachi SSG was able to develop and refine the USP-V because it could integrate relevant technologies from across the whole Hitachi organisation.
Iwata said: "With the USP-V in terms of technology we are still ahead. Of course someone could come along and beat it."
Today HDS has more than 4,100 employees and operates in more than 100 countries. Its storage product range runs from the USP-V, through the USP-VM, the AMS mid-range, the SMS low-end, the HCAP archive box, the BluArc-sourced NAS and a range of external storage products. It has also taken on responsibility for selling Hitachi servers, such as the Blade Symphony products, and also sells the UCP (Universal Compute Platform), Hitachi's entry into the integrated IT stack business. This incidentally already has a networking component.
Mikkelson said: "There is a networking element in there but we can't say anything about it. [The] UCP will be available in early 2011. We're protecting the rights of publicly-traded companies." So some other company or companies are supplying networking component to UCP and HDS doesn't want to or can't say who they are. New software is also being developed to manage the UCP stack.
The HDS mystery
HDS is a western body wrapped around a Japanese core, contributing market intelligence and customer needs to that core. In storage companies like EMC and NetApp people involved in the development of core technologies and the deepest company strategies are the same nationalities and share the same culture as the outer marketing, sales, service and support staff. They take part in standards bodies and technology conferences and brief financial analysts. The general IT world of customers both large and small, competitors, analysts, and reporters feel they have a handle on EMC, NetApp and their western economy-based competitors because of this.
There is a blind spot to westerners at the Japanese heart of HDS because it is Japanese, and both the language and the culture make it pretty impenetrable to westerners. There is, for example, no movement of core staff between the Hitachi Storage Solutions Group and western competitors, nothing like the move of EMC's David Donatelli to HP. HDS CEO Jack Domme is not the CEO of Hitachi SSG, notwithstanding that he has done a brilliant job at integrating HDS with Hitachi SSG and developing HDS' own capabilities through deals and the Archivas acquisition.
Who do we know of in Hitachi SSG? Yoshihiro Asaka is the general manager of storage systems development in Hitachi SSG. Most of us have never heard of him. Shigeo Honma is Hitachi SSG's chief engineer and a top Hitachi storage research and development man, but also relatively unknown in the west.
Hu Yoshida is a public face and CTO for HDS, but he is American, not Japanese. The ex-head of HDS in the USA, Dave Roberson, did move to HP and HP recently agreed to continue the OEM agreement with Hitachi SSG for the USP-V, which indicates how highly HP views the product, but such personnel moves are small in number.
Hitachi SSG is good though, very good, at gaining market intelligence from the west through HDS. One aspect of this is research. In 2000 it started up a research lab at its Santa Clara headquarters, and this is partially staffed by researchers on rotation from other Hitachi research centres around the globe. It also bought Archivas in 2007 and that archiving technology forms part of the Hitachi Content Platform with a development centre in Waltham, Massachusetts. It is as if Hitachi SSG hoovers up marketing requirements outside Japan through HDS and then builds the products needed, or rather refines the existing products using resources from across Hitachi, and sells them through HDS outside Japan.
It's a formula that has worked well so far.
Lost in Translation
The fact is HDS cannot really explain and present itself in its entirety to western customers and the western IT market in the same way as a Dell, an HP or NetApp or EMC can. We just don't feel we know what makes HDS tick in the same way we do Dell and the others. HDS is just not family because of this.
It cannot explain why it created the USP-V - because it didn't, Hitachi SSG did, in Japan, and its deepest thinking and reasons for doing so are literally lost in translation. HDS is a not very transparent and relatively impermeable western skin wrapped around the Japanese enigma that is Hitachi SSG. Like a champion masked wrestler we are left with the thought that, boy, he's really good but we don't have a clue who he really is. Setting aside the fading celebrity angle, the film Lost in Translation really is quite an apt metaphor for HDS and the Hitachi Storage Solutions Group. ®